Navigation

05 September 2012

5th September,
Wednesday

Residential

Govt acts to contain rash of
shoebox units

Source: Business
Times

The Urban Redevelopment Authority
(URA) has acted to manage the proportion of shoebox units in suburban areas. It
is seeking to cap the number of homes in new developments, based on an average
unit size of 70 sq m gross floor area.

At the same time, Singapore's
planning authority is giving flexibility to developers to include some smaller
housing units in their projects to cater to diverse demographic groups and
lifestyles. Notably, URA has not stipulated a minimum apartment size.

National Development Minister Khaw
Boon Wan said in his blog yesterday: "Developers are still free to build
small apartments if there is demand, but there must be a good mixture of large
and small units, in order to meet the URA guidelines."

URA's announcement was generally
welcomed in most quarters, though some players say it could dent land prices
for smaller en bloc sale sites as developers typically tend to mint a higher
proportion of small units on such sites.

From 4 November, the maximum number
of units in non-landed private housing projects outside the Central Area will
be capped based on an average area of 70 sq m. This also applies to the
residential component of mixed-use developments.

The formula used is identical to the
one URA introduced last November for all new condo and flat projects in
residential areas with 1.4 plot ratio islandwide. Similarly, a guideline on the
maximum number of homes based on an average size of 100 sq m, introduced last
year in Telok Kurau Estate, will be extended to Kovan and Joo Chiat/Jalan Eunos
estates from 4 November.

According to URA, the stock of
completed shoebox units (up to 50 sq m) will increase more than four-fold from about
2,400 units at end-2011 to about 11,000 units by end-2015. There is concern
that some may be left empty if there is insufficient demand. Also while rental
yields of shoebox units are relatively attractive now, the trend may not be
sustained as more shoebox supply is completed. Shoebox units also tend to
inject more cars in a neighbourhood than planned.

Chinese developer Qingjian Realty has
put in the top bid for yet another Punggol site - a 99-year- leasehold
executive condominium (EC) at Punggol Way/Punggol Walk.

It offered $189.87 million, or
$313.63 per sq ft (psf) of potential gross floor area, beating the next highest
bidder, Verspring Properties by less than one per cent.

The state tender drew just three
bids, fewer than what market analysts had expected.

"With only three bidders for the
subject site, tender participation is below expectations, especially since the
Waterbay site at Punggol Central/Edgefield Plains attracted 10 parties earlier
in March," said an analyst.

"Qingjian has a significant
market share in Punggol," said Lee Sze Teck, Dennis Wee Group senior
manager. "This means that they have superior knowledge of the ground
conditions including buyers' profile. With many projects in the area, they can
also manage their resources better."

The top bid reflects a breakeven cost
of between $580 and $630 psf and an estimated selling price of between $700 and
$750 psf, Mr Lee added.